“There is only one good, knowledge, and only one evil, ignorance”. Ignazio Visco, governor of the Bank of Italy, uses Socrates to introduce his book "Difficult years, from the financial crisis to the new challenges of the economy", published by Il Mulino and presented yesterday for the first time at the Opificio Golinelli in Bologna, together with former premier Romano Prodi and the president of Unindustria Reggio Emilia, Fabio Storchi.
To understand who we are today, Visco looks back and analyzes a decade of concerns and major events, from the global financial crisis to that of euro area sovereign debt, even indulging in a bit of bitter irony in the presentation, on the day in which the Monetary Fund in Davos says that Italy is one of the major global risks. In the book, the governor jokes, there is a printing error where it reads that “we are emerging” from the difficult years. Either we've already gotten out of it or we're still in it and knowing what the real situation is is better than putting our heads in the sand. Knowing is good, ignoring is bad.
Indeed, criticism of the numbers and growth forecasts will not give the country the necessary push to get going and will not provide Europe with the injection of confidence it needs. The light of knowledge is never arrogant: “All predictions – admits Visco – can be wrong. They say 0,6% or 1% or 1,5%, but in reality nothing can be predicted, nobody has a crystal ball”. What can be done, however, is to line up facts, probabilities, positive and negative, draw up a graph and see which side it leans on.
This is essentially what the central institute did in thelatest bulletin with the 2019 GDP estimate, revised to 0,6%, taking into account the positive impact that the new budget maneuver could have on consumption immediately. The result is that "downside risks are greater than upside risks”. 0,6% of GDP in 2019, against the 1% taken into account by the government "is actually the 'mode', as they say in mathematics, of a downward asymmetric probability distribution, the lowest median" .
Italy is therefore "a country in difficulty, on a continent in difficulty". Brexit is the other major destabilizing element, according to the IMF, which starts from Europe and has global repercussions.
Paradoxically though, according to Romano Prodi, Brexit could help Europe regroup, if not out of love, at least out of necessity. Also in view of the European elections, the difficult path of Great Britain's exit from the Union could reinforce the sense of the irreversibility of the steps taken by the member countries. “In this match – observes Prodi, former president of the EU Commission – we have seen a disunited Kingdom and a united Europe. And that's good, because we need to be together more than ever in a world where the US and Russia have us in their grip. If we are rational we will do it”.
On another point Prodi and Visco appeared particularly in harmony and that is on the soundness of the Italian banking system.
"No one has ever said that the Italian one is the best banking system in Europe - claims Visco - it has been said that it is a solid system overall". Italian banks "have had the lowest public contribution of the whole European Union". And if there is a regret it is that of having badly negotiated the rules of the game which have changed since 2013. Stay ithe problem of corporate credit, in a country where money costs more due to the spread and where small and medium-sized enterprises resort to banks much more than in other countries.
Finally, another knot to untie in Italy is that of training, perhaps the most important node.
“The problem of trust in our country – says Visco – in my opinion derives from our limited ability to grow. If the debt-to-GDP ratio has come to exceed 130%, it is because we are growing little. Against this drift we must invest as much as we can in education, training and research”. Our labor market “is far too flexible today. People like Treu and Biagi were wrong. In these years temporary and precarious work has increased and companies have invested less in permanent training. It's time to rethink this path andinvest more in knowledge and skills, to overcome the delays that are not only those of southern Italy”. Knowledge is good, ignorance is evil.
